Retail’s True Believers

Retail systems are a strange lot of machines that include everything from fast food cash registers, to in-store servers, to mainframes. While UNIX, Windows, and DOS have traditionally powered your local department or hardware store, there's more than a handful of companies turning to the Penguin to cash-in on the many benefits of Linux. Cha-ching!

Harry Roberts can see the future and, for him, it’s black and white: penguin colors. Roberts, a self-proclaimed “old mainframe guy” and Chief Information Officer of Pennsylvania-based retailer Boscov’s, found himself on the open source road to Damascus when he had his staff create a Y2K disaster recovery plan. Reviewing the plan, he discovered that his Windows NT server farm, which ran everything from file and print services to the company’s gift registry, would take a serious amount of time to restore in the event of a disaster. “We were looking at weeks, instead of hours or days,” recalls Roberts.

Before long, a small-scale effort to improve disaster recovery time had snowballed into a full-scale Linux conversion. Now, four years later, Roberts has moved half of his back-end Windows applications to Linux, and, as far as he’s concerned, that’s just the beginning. Using Linux and Star Office, he’s already begun piloting an effort that he hopes will replace Microsoft software on 2,000 of Boscov’s 2,500 desktops. And Roberts doesn’t want to stop there. He hopes to inject Linux all the way through Boscov’s 39 department stores, from the point-of-sale (POS) cash registers, all the way to his zSeries mainframe running in the corporate data center.


Retail systems are a strange lot. They can include anything from fast food retail cash registers, to in-store servers, to server farms and mainframe computers in the head office. And the people who use retail systems are the very definition of diversity. They range from little old ladies swiping cartons of milk at self-scan checkouts, to tech savvy store managers, to the serious pocket-protector set found lurking behind the glass walls of the data center. In fact, just about anyone in the world could theoretically become a retail system user.

Perhaps appropriately, the retail industry’s incredible diversity has made it conservative. Systems that work tend to remain in operation for years and years. But that diversity has also made retail particularly well-suited to an operating system like Linux. With its openness and extreme flexibility, Linux has a way of almost organically penetrating niches that are filled with a bewildering array of products. And that’s exactly what Linux is doing in retail — popping up in just about every place imaginable — though whether or not Linux is considered bleeding edge depends very much on who you ask.

Robin Lynas, the CIO of Canadian clothing retailer Mark’s Work Wearhouse, says that Linux has definitely progressed “past the early adopter stage.” He expects the penguin to be gradually recognized as a standard part of the retail industry over the next three years.

Industry analyst firm AMR Research predicts that Linux will be more eagerly adopted by larger retailers than by “mom and pop” operations, where the entrenched familiarity with Windows continues to make it the default choice. “Linux will continue to make inroads in the POS space — especially in those retailers who are either migrating from SCO, or who have an inclination to roll their own applications,” says AMR Analyst Paula Rosenblum. However, she also predicts that “Windows-based apps will remain dominant as the operating system price falls in response to market conditions.”

So while the depth of Linux’s penetration in retail remains unclear, one thing is certain: an awful lot of retailers are kicking the tires. Today, companies as diverse as Little Caesar’s Pizza, Intrawest Corp., and of course, Linux’s long-standing, retail poster child, Burlington Coat Factory, (which began experimenting with Linux as its desktop and server OS way back in 1999), have all rolled out Linux systems.

Boscov’s Linux conversion is as remarkable as it is thorough. In a slumping industry known for its conservative approach to IT — we’re talking about a place where DOS is still considered a major player — there are a lot of retailers who would sooner hunker down and stick to established brands like Windows or SCO than embrace this new operating system that IBM calls a “disruptive technology.”

And in retail, as in so many other industries, IBM may prove to be Linux’s best friend. Though retail observers say that IBM has been relatively slow to embrace Linux as an alternative to its 4690 POS terminals — in part because Linux’s profit margins and brand recognition may not be as strong as its proprietary competitors — there’s no doubt that when customers demand Linux, IBM can come through. In fact, Boscov’s experience with Linux is a textbook case study of how Linux’s unified set of APIs create new opportunities for companies like Big Blue.

At Boscov’s, a 75 year-old retailer, for example, it was a brand new zSeries mainframe that opened the door to Linux. The same Y2K plan that showed Harry Roberts the recovery problems in his server farm also found the mainframe to be extremely secure. So why not try and migrate some of the server farm applications to the mainframe? “zSeries offered an opportunity to do what I had to do on my 390, but it also had this engine you could turn on for free that would run Linux,” remembers Roberts. “We were able to get our feet wet at no additional cost.”

The first applications to move to Linux on the mainframe were file and print services, which Boscov’s migrated from Windows NT. “The Windows NT servers used to go down once a week in the old Windows environment,” says Roberts. Running on Linux on the mainframe, however, has simply eradicated the problem. “To this day, those virtual Linux instances have never been down.”

File and print serving worked so well that Roberts immediately saw the chance to lower the number of systems in his server farm. And though Boscov’s CIO says Microsoft’s move to its Licensing 6 subscription-based licensing plan was a factor, the real impetus to move to Linux wasn’t just the desire to cut down on system costs, it was the price of staffing as well. With one IT person required for every ten to twelve Windows servers, Roberts realized that he could realize some significant total cost of ownership savings by moving applications to Linux on the mainframe.

The next application to go to Linux was Boscov’s invoice processing system. Today, Boscov’s server farm has shrunk from 90 systems to 45, and Roberts is now moving the gift registry and his e-commerce platform to Linux. “To date, I’ve saved the equivalent of about six full-time employees in manpower,” he says. “I’ve probably saved another quarter of a million dollars in software, and about a half million in hardware acquisition,” he adds.

POS-itively Linux

And Linux is breathing new life into hardware that IBM no longer even supports. That’s what Mark’s Work Warehouse learned when the Canadian retailer turned to Linux to implement a new customer relationship management (CRM) system. Mark’s had invested in IBM NetVista network computers in the late ’90s, but was left stranded when IBM stopped supporting its line of NCs in 2002.

In March of the same year, Mark’s decided to upgrade its CRM system. The company created a J2EE application that allowed Mark’s sales force to track its interactions with the company’s corporate customers. IT wrote a Web-based interface to the CRM system that allowed customers to walk into any retail outlet and access their corporate accounts. The problem was that the Web interface didn’t work on Marks’ aging 5250 terminals, and it wouldn’t work on its Netvista network computers.

Enter Linux. Installed on 64 MB CompactFlash cards and custom-configured for the retailer by a German company called Igel, Linux provided an inexpensive upgrade to the aging NCs. Mark’s Work Warehouse CIO Robin Lynas says that the NC-to-Linux upgrade is simple. “I send the flash card out [to the retail outlet], the flash card gets plugged into all of those existing thin clients I have out there, and instantly, they become Web-capable. I can use the investment I’ve already got.”

Lynas says he’s upgrading his entire network of POS systems to Linux at the rate of 20 retail outlets per week. He expects to have all 320 Mark’s Work Wearhouse retail outlets Linux-enabled by this summer.

By using Linux as his POS system, Lynas is definitely ahead of the curve. According to retail IT research company IHL Consulting Group, Linux currently holds just four percent of the North American POS market — up from two percent in 2000.

IHL VP of Product Development Lee Holeman says that after greeting Linux as a point of sale operating system with much fanfare during the heady days of open source IPOs, the industry cooled to the free OS after a number of high profile retailers tested Linux and then failed to follow through with major deployments. According to Holeman, after Home Depot and then Musicland put the brakes on their Linux deployments, “I think there was at least an initial pause in everybody’s excitement.”

But with Linux’s growing appeal as a server OS, and its growing number of POS customer wins — recently, Hannaford Brothers, Regal Cinemas, and Ace Hardware have all jumped on the bandwagon — the retail industry is starting to warm again to Linux.

IHL’s Holeman says that some parts of the retail industry are more likely to adopt Linux than others. According to him, quick service restaurants and retailers known as “category killers” (“the guys that basically dominate their sector of retail,” says Holeman, referring to companies like Sherwin-Williams, which recently rolled out Linux POS devices in its 2,500 stores) are the most likely to adopt Linux right now. “They tend to be early adopters with technology,” he explains. “They have the resources [to] expend on something like Linux.”

At the other end of the spectrum are retailers like supermarkets and drug stores, where Windows CE and the IBM 4690 dominate. There, says Holeman, retailers will continue to pay proprietary licensing fees rather than take on the challenge of developing and supporting a Linux solution. “The opportunity cost of deploying their own [Linux] solution in labor and manpower will be greater than paying the license fee,” he says.

Costco’s pharmacy department is a typical example of a retailer that’s decided not to make the switch. Running a complex and extremely specialized application that has essentially remained unchanged since the 1980s, Costco Directory of Pharmacy Systems Fred Floyd doesn’t see a lot more than uncertainty and added expenses in switching his SCO OpenServer-based Pharmacy system to Linux. For him, the show stopper expense is the $1395 licensing fee he would have to pay to obtain new Linux licenses for his Micro Focus Cobol runtime environment. “If I changed the pharmacy management system for 300 locations, it would take me four years and $10 million,” says Floyd.

Floyd says that he has nothing against Linux, and he notes that developers throughout Costco’s IT organization are experimenting with it because it’s “cheap and free.” He adds that Linux has, at least, got his attention. “I think it’s got merit in the long run,” he says. “And I think it will continue to be looked at.”

Breaking Down the Barriers

Other areas that have traditionally been considered stumbling blocks for Linux in retail are independent software developer (ISV) and device driver support. The retail industry employs a wide range of customized peripherals — such as specialized display devices, scanners and printers — that have not traditionally supported Linux. But Linux has significantly narrowed the gap in this area over the last few years and driver support is no longer considered a stumbling block. This is helped by the fact that because Linux is open source, it’s very easy for any third party — ISVs, resellers, or even customers themselves — to create their own drivers should the need arise.

Software vendor support remains an issue, but this too is a place where Linux is gaining momentum. “The Linux movement really picked up steam last year,” says Ravi Bagal, the director of marketing with retail management software ISV Tomax. According to him, his retail customers are starting to show genuine interest in Linux, based on two of its benefits: its promise of a lower total cost of ownership, and the freedom from proprietary lock-in.

Interestingly, ISV support is one area where SCO could do a lot to give Linux a boost — especially as an in-store server operating system. And while SCO has helped a few clients, like optical retailer Pearle Europe and Michaels Arts and Crafts Store, move to Linux, critics say that the company has yet to articulate a clear Unix to Linux migration path for its ISVs. Furthermore, SCO’s lawsuit over IBM’s contributions to the Linux kernel has helped cement the impression that it may not be fully committed to Linux.

Ultimately, Linux’s success on the back-end will depend on whether stories like Boscov’s and Mark’s Work Wearhouse can convince other retailers that Linux represents a genuine total cost of ownership play. No matter what SCO and IBM do, if the retail customers demand Linux, third party ISVs will port.

In the final evaluation, all of Linux’s historical barriers in retail may be dwarfed by one issue: perception. Right now this is Linux’s “biggest problem,” says Dr. Naresh Sharma, a senior analyst with Progressive Strategies, Inc. “These retail companies are technically inferior to technology companies in general.” He continues, “It is very difficult for people [in retail] to understand the benefit of having Linux as a backend server.”

Difficult as it may be, retailers are trying. According to Ravi Bagal, though his company has only two of its 120 retail customers moving into production on Linux, “Every one of our customers is asking about it.”

Bob McMillan is Linux Magazine’s Editor-at-Large. He can be reached at bob@filbert.net.

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